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The 4th Industry Technology Evolution Redefines the Insurance Industry

4 Nov 2020

The 4th Industry Technology Evolution Redefines the Insurance Industry

4 Nov 2020

“The internet is no longer a web that we connect to. Instead, it’s a computerized, networked, and interconnected world that we live in. This is the future, and what we’re calling the Internet of Things.” Bruce Schneier, Security Technologist & Author 

FRTC is of the view that the use of technology and data permits insurers to secure helpful insights into their customers’ needs as well as the opportunity to use inventive approaches to deliver their services.  

The use of technology and Artificial Intelligence (AI) places an insurance company ahead of its competitors and delivers a personal customer experience. Technology-driven operations allows insurance companies to make more investments, reduce premium prices, and improve profitability. Insurers that fail to transform within the technology driven trend are likely to lose market share. 

As we move into a post-digital world, 81% of insurers acknowledge that technology has become an inextricable part of the human experience (Accenture: 2020). 

The Accenture research report further t indicates the following findings (Accenture: 2020): 

  • Consumers and commercial customers have increasingly high expectations, but insurers are building digital offerings with playbooks from the past. 
  • To unlock the promise of a world made better and easier by tech, businesses must resolve these mismatched expectations. 
  • 19 % of consumers report that technology is so intertwined with all aspects of their day-to-day lives that they view it as an extension of themselves. 
  • 52% of consumers say that technology plays a prominent role or is ingrained into almost all aspects of their day-to-day lives. 

How is the insurance value chain affected by technology? 

The 4th Industry Technology Evolution redefines the insurance industry and forces transformation of thinking in the insurance value chain which consist of. product design and development, pricing and underwriting, marketing, distribution, and policy claims management. 

The added advantages of using technology and digitalizing is that the insurance value chain increases the client’s competitiveness, improve the insurances company’s value chain and allows the leveraging of data.  

  1. Product design and development 
  • Internet of Things (IoT) devices 

Internet of Things (IoT) devices such as Smartphone Telematics, Super dash-cam, Leak Wearable IoT devices in life and health insurance detection IoT robots are used to reduce insurance claims (Littlejohns:2019). For example, Discovery Insure’s innovative Vitality Drive Sensor which uses vehicle telematics to accurately track driving behaviour has won the Best Commercial IoT solution in the MTN Business Internet of Things (IoT) Awards (Discovery:2019) 

  • Emerging risks such as cyber crimes   

The insurance industry is an attractive target for cyber criminals for several reasons. Chiefly, insurance companies are hit because a successful attack will yield significant and profitable results. These organisations typically generate high volumes of data containing personal and financial data about customers, which is valuable on the black market (Tassev:2019). 

  • Social-network insurance groups 

The use of social media by insurance companies has been a topic of debate for years now, although there's very little legal guidance about what privacy rights we have when posting online (Baron: 2019). 

  1. Pricing and underwriting 

Michaels & Ahmed (2015) explains, “In our view, there are three factors insurers should consider as they pursue their future claims strategy. First, the use of data, mobile technology and analytics will enable companies to rise to the next level and improve their performance in tangible ways’’. Technology is also used to gather critical customer data to calculate risk profiles to determine premiums.

Although artificial Intelligence improves and speed up underwriting,  it does not necessarily or  realistically replace the valuable insight of  an  expert human, for facultative insurance that is  purchased by a primary insurer to cover a single risk or a  group of risks for the insurer's business. Therefore, these technological advances should be debated but not necessarily replace, human competences.

  1. Marketing 

More insurers are using technology such as mobile apps, online marketing and social media adverts to capture and sustain customer attention: 

  • by gathering critical customer data to propose attractive and personalized insurance quotes. 
  • providing an easy online process for customers to file claims and receive payment. 
  • and at the customers convenience interacting frequenting through an online chat box, email or social media. For example, Old Mutual uses its social media platform such as Twitter, Facebook, Instagram and YouTub to market its brand through social responsibility programmes (Old Mutual:2020). 

According to Kestrel (2016) insurance companies are investing in four areas of technology that show the most promising potential for marketing and selling in the insurance field as follows: 

Online Portals: Many brokers are already using online quotation and payment systems. For example, Scheme Serve can be used to deliver this functionality easily. 

Mobile: Mobile is the new gateway to the internet. It is s likely to overtake desktop and laptop access in the near future and a good 40% of business is conducted online. You need to ensure your brokerage is positioned to take advantage of mobile and ensure that your marketing is up to scratch for the platform. 

Internet Marketing: Internet Marketing is a big field. It is more than a website and it is more than SEO. There are dozens of different iterations such as SEM (Search Engine Marketing), PPC (Pay Per Click), PPI (Pay Per Impression), etc.

d) Distribution 
The purpose of a distribution channel is to permit customers to access and purchase products in the most cost-effective way for the business. 

The insurance industry is improving efficiency and distribution of its products and services to customers either through multi- channel interaction such has call centres, insurance agents or an omni-channel interaction through the use of technology  which offers the consumer an integrated and seamless experience across all channels. For example, Dial Direct’s omni-channel distribution focuses an easy and fast application process, the company sells its products in a straightforward message ‘Get an insurance quote and buy your own insurance online’ (dial direct: 2020).  

It is each insurance service duty to prioritize meeting the expectations of the new, digital customers either through the multi channel  or omi- channel interaction.  

The choice of interaction channel must help to provide excellent customer service to improve customer retention rates, foster customer satisfaction, and decrease frustration for both customers and the insurance company. 

e) Policy claims management 

More insurance companies are using technology and Big Data to reduce fraud and improve claims processes globally.  

Michaels.N.  & Ahmed.I.  (2015: 3)   indicates that advances in digital and analytical capabilities will reduce overall claims costs and expenses, bolster underwriting practices and enable greater consistency in business processes. 

Self-service apps or customer portals improves a customer’s post sales experience enabling greater data collection and keeps insurance companies informed about how satisfied their they are with their insurance experience.  For example, with MiWay a client can register a claim on an MiWay’s mobile app and an online self-help service (MiWay:2020). 

According to the 2017 World Insurance Report, nearly three-quarters (74.8%) of tech-savvy customers place importance on the ability to send claim notifications to insurers online or via mobile. Moreover, nearly 70% of Gen Y customers value the ability to digitally renew or cancel policies. This segment of young and tech-savvy customers, or as we like to call them digital customers, are important segments in terms of incremental revenue potential. The same study shows that 42.1% of tech savvy customers are likely to buy another insurance product compared to 19.7% of non-tech-savvy customers (Tolboom:2017). 

The use of sophisticated technology in the insurance industry has proved to us that it can be used strategically to unlock innovative ways to make improvements  across insurance industry  such as providing affordable premiums,  reducing operational costs and risks, ensuring the protection of data, and processing faster applications and claims settlement. Every day the impact of technology and AI  intensifies and becomes more  practical ;  as it can it can identify, assess, and underwrite emerging risks and identify new revenue sources. 

FRTC offers the following short skills training to ensure people working in the Insurance and Banking sector are adequately skilled with current 4IR skills which are currently in demand to remain relevant and on par with the shift in skills sets needed. 

Some of our short accredited short skills training include: 

Artificial Intelligence (AI) is the branch of computer sciences that emphasizes the development of intelligence machines, thinking and working like humans. For example, speech recognition, problem-solving, learning and planning. Artificial intelligence (AI) is the ability of a computer or a robot controlled by a computer to do tasks that are usually done by humans because they require human intelligence and discernment. 

Duration: 5 days 

CYBERSECURITY - Cyber security is the practice of defending computers,  servers, mobile devices, electronic systems, networks,  and data from malicious attacks. 

It is also known as information technology security or electronic information security. A compromised application could provide access to the data its designed to protect. Cybersecurity is important because it encompasses everything that pertains to protecting our sensitive data, personally identifiable information (PII), protected health information (PHI), personal information, intellectual property, data, and governmental and industry information systems from theft and damage attempted. 

Duration:  5 days 

Contact FRTC, for information on how you can gain credits for these courses. 

DIGITALISATION - Digitalisation is transformative. It changes how companies interact with their customers and often their revenue streams. 

The potential benefits of digitalisation includes better workflow, more efficiency, better products, and entirely new services, better competitiveness. Besides the mentioned benefits, properly digitalised businesses also enjoy: 

 • New customer acquisition channels.  
• Improved working conditions and better employee retention.  
• Improved decision-making. 
• More willingness to innovate.
• Better teamwork. 

Duration:  5 days 

Contact FRTC, for information on how you can gain credits for these courses. 

“Some people call this artificial intelligence, but the reality is this technology will enhance us. So instead of artificial intelligence, I think we’ll augment our intelligence. “ – Ginni Rometty, CEO of IBM 

Reference 

  1. Accenture . 2020. Insurance Technology Vision for Insurance 2020 (online) https://www.accenture.com/us-en/insights/insurance/technology-vision-insurance-2020 (Accessed 09 June 2020) 
  2. Baron.J. .2019. Life Insurers Can Use Social Media Posts To Determine Premiums, As Long As They Don't Discriminate (online) https://www.forbes.com/sites/jessicabaron/2019/02/04/life-insurers-can-use-social-media-posts-to-determine-premium(Accessed 09 June 2020) 
  3. dial direct.  2020.   Get an insurance quote and buy your own insurance online   (online) https://www.dialdirect.co.za/(Accessed 10  June 2020) 
  4. Discovery. 2019.  Discovery Insure’s innovative Vitality Drive Sensor which uses vehicle telematics to accurately track driving behaviour has won the Best Commercial IoT solution in the MTN Business Internet of Things (IoT) Awards. (online) https://www.discovery.co.za/corporate/news-vitality-drive-sensor-wins (Accessed 10  June 2020)
  5. Kestrel .N. 2016 . 4 Areas in Which Technology Can Help Insurance Marketing and Vice-Versa (online) https://riskheads.org/4-areas-technology-insurance-marketing-viceversa/(Accessed 09 June 2020) 
  6. Littlejohns .P.  2019 How Internet of Things devices are reducing insurance claims (online) https://www.nsinsurance.com/news/iot-insurance-devices/(Accessed 09 June 2020) 
  7. Michaels .N.  & Ahmed.I.  (2015)  Claims transformation: Riding the wave to sustainable results (online) ttps://www.ey.com/Publication/vwLUAssets/EY-claims-transformation/$File/EY-claims-transformation.PDF(Accessed 09 June 2020) 
  8. MiWay:2020  Easy and Fast Claims (online) https://www.miway.co.za/claims/ (Accessed 10  June 2020) 
  9. Old Mutual .2020. Tweet, like, share It's all about the 'gram, the glam and the tweets. Let's play nice.  (online)  https://www.oldmutual.co.za/about/social-media-guidelines/  (Accessed 10  June 2020) 
  10. Tassev .S. 2019. Curbing the effects of cyber crime in insurance industry (online) https://www.itweb.co.za/content/  (Accessed 09 June 2020) 
  11. Tolboom. R. 2017. Customer service best practices in the insurance industry (online) https://www.tjip.com/en/publications/customer-service-best-practices-in-the-insurance-industry (Accessed 09 June 2020) 

For further info contact us on 0312073245 or info@frtc.co.za

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