Historically, the insurance industry hasn’t had a reputation for being quick to adopt new technologies. However, ongoing regulatory pressures, rising competition, and changing policyholder demands have created new challenges for insurers, which digital transformation can help to address. 

Today, leading insurance companies have become much more policyholder-centric, catering to the unique needs, behaviors, and preferences of consumers rather than offering a one-size-fits-all approach. 

These high-touch, personalized customer experiences have driven better policyholder satisfaction, loyalty, and retention, all of which support insurers’ bottom line. However, adopting a digital insurance model generates new concerns around policyholder data protection and online account security. 

This blog will explore the ongoing digital transformation of the insurance market, how the customer experience has been impacted, and what traditional insurers can do to deal with market headwinds and orchestrate a seamless experience for policyholders.

Over the past decade, there has been a marked shift in the insurance space from a low-touch to a high-touch customer experience. There is a place for both in insurance, though the personalization offered through high-touch interactions provides a much more convenient experience for policyholders, ensuring they receive helpful resolutions or support for their unique circumstances.

Directing policyholders to a knowledge-base article to help address a question or concern they have or sending out automated product emails to all customers are both examples of low-touch service. On the other hand, high-touch service looks like the greater use of policyholder data to drive personalized premium pricing or complimentary offerings. For instance, a health insurance provider may take a policyholder’s wellness data, adjust their premium accordingly, and make additional offers like hardware fitness trackers or third party digital-dieting to help them reach their goals.

Adapting to this new landscape can be a challenge for traditional insurers. Consumers want the convenience of a digital insurance experience, but the direct, personalized support that comes from high-touch interactions. Thus, even though most insurers are aware of this shifting dynamic, they may lack the infrastructure and expertise to make the transition.

To get a better idea of the ongoing shifts occurring throughout the market, this blog will highlight some of the top insurance industry trends to watch out for this year.

The Rise of Digital Data Collection

As the push for a better policyholder experience continues to take hold throughout the insurance space, digital data collection is becoming more relevant. 

Insurers can use digital forms, software, and automated technology to become less reliant on manual data entry and streamline the collection process for both agents and policyholders alike. In turn, it becomes easier for insurers to adopt data-driven premium pricing personalization. This technology has the potential to speed up turnaround times on policy underwriting, claims processing, and more, all of which can enhance the policyholder experience and increase renewal conversions.

However, integrating and managing vast amounts of digital data is not something that all insurers’ tech stacks are equipped for. Insurance companies need to make sure the consumer data they collect stays secure to meet regulatory requirements and retain policyholder trust. However, it also needs to be accessible to the systems and employees who rely on the data to derive critical insights.

Herein is where converged identity access management (IAM) capabilities can help ensure data security and build sustained trust, loyalty, and customer lifetime value.

Availability and Utilization of Customer Data

Insurance has always been a data-driven field, with providers leveraging consumer data to make underwriting decisions, price policies, and manage risk effectively. In the digital age, access to consumer data has grown exponentially, allowing insurers to assess risk to support their decision-making and deeper insights to deliver personalized product offerings.

Today, data is generated through a variety of sources, including IoT devices, social media, online interactions, and third-party sources such as banks and credit rating agencies. Every time an individual visits a website, scrolls on a page, likes a post, or searches for a new insurance policy quote, they’re generating data that is useful to insurers to understand customers’ needs, preferences, and behaviors. Insurance companies can leverage this data to tailor their offerings and services to individual needs.

The sheer volume of data available to insurers has revolutionized how insurers operate, though there are some ethical concerns surrounding the use of sensitive customer data in insurance practices such as financial information, health records, and online behaviors. There is also the security concern around malicious actors who seek to compromise credentials to gain access to this data.

Converged IAM solutions address these concerns, helping insurers secure customer data and credentials, build a unified view of needs across all channels via secure APIs, and then use these insights to drive personalization and upselling campaigns.

Growth of Usage-Based Insurance and Telematics

Another ongoing trend in the insurance space is the emergence of usage-based insurance (UBI). This includes auto policies, made possible with telematics that track drivers’ location, speed, and other data. This can also apply to healthcare and well-being offerings, with health tracker data used to drive life insurance premiums and bespoke recommendations through first and third-party channels.

This is a more personalized insurance offering that’s tailored to the unique driving behaviors of policyholders, which results in fairer pricing and encourages safer driving. Usage-based insurance can also apply to other insurance lines, including homeowner’s policies and health insurance.

Usage-based insurance is becoming more appealing to consumers in the wake of rising inflation. In fact, according to a recent report by TransUnion, adoption of telematics from auto insurers increased by 33% over the first quarter of 2022, with many consumers hoping to save money on their auto policies.

In the coming years, telematics technology will continue to advance, offering more precise behavior data and fair pricing for policyholders. 89% of policyholders in the U.S. are willing to give up more of their data for lower premiums, though insurers must implement IAM solutions to prevent misuse or unauthorized access to sensitive information like a driver’s geolocation or their personal health data.

The Need for High-Touch Interactions

In the age of policyholder-centric insurance, high-touch interactions allow providers to generate meaningful relationships with their customers and offer a more seamless, convenient experience.

Despite the large shift to digital, insurance consumers still place high value on the human touch. For instance, McKinsey & Co. notes that agents and advisors are still the highest-rated channel for insurance customer satisfaction, with 20% of policyholders reporting that they would switch carriers if their advisor left the company.

Through high-touch interactions, policyholders can receive direct support for their questions or inquiries, leading to faster resolutions and better satisfaction.

The Role of Identity-Centric Solutions

Modern consumers expect a seamless and secure experience when purchasing a product or using a service–and insurance is no exception. Identity-centric solutions can help insurers meet these demands, orchestrating the entire customer journey around the policyholder’s unique profile.

Insurers can offer personalized product recommendations, coverage options, and support, based on the customer’s preferences and needs. As a result, identity-centric solutions differentiate insurance companies from the rest of the market, as policyholders feel like the experience was tailored to them.

Policyholders want better convenience without putting their data at risk, so insurers can leverage converged IAM solutions to offer robust security and a frictionless user experience.

In response to the current landscape, the emergence of insurtech solutions, facilitated by secure APIs, aims to address the persistent challenges and inefficiencies in the insurance market. 

By leveraging advanced technology such as data analytics, automation, AI, and IoT devices, insurtechs are set to disrupt the traditional insurance model–to the benefit of insurers and consumers–by making it more streamlined and efficient.

Automation in Insurance Underwriting

One of the main challenges of the traditional insurance model is that it is highly inefficient. Particularly with insurance processes that are resource-intensive and tedious, like underwriting, slow turnaround times can frustrate consumers and cause them to seek out a competitor who can offer them a quote much faster. Efficient and accurate risk assessment adds time-consuming manual calculation to the process. For providers, this means the premium-to-yield ratio remains low. 

With automation, insurers can make more accurate, data-driven underwriting decisions in a fraction of the time. These digital capabilities can help streamline insurance operations, reducing the manual efforts required to collect customer information, process applications, enter data into the proper systems, and perform risk assessments. Not only does this help insurers work faster and reduce operational costs, but it also helps assess risk more accurately and price premiums appropriately.

Big Data Analytics

Access to large amounts of customer data doesn’t provide much value if insurers don’t have the tools to efficiently process and analyze it. Data analytics makes it possible for insurers to derive insights from large, unstructured datasets in ways that would otherwise be impossible to do manually. It also allows individual user data to be used for making real-time decisions on offers and experiences to engage those particular policyholders.

As insurers begin to collect digital data from an increasingly large array of sources, such as social media, IoT devices, and more, identity solutions will enable better decision-making, more personalized offerings, fair premiums, and enhanced risk management capabilities.

AI and Machine Learning

The possible use cases of artificial intelligence (AI) and machine learning (ML) in insurance are growing by the day–from enhanced fraud detection to quicker claims processing. These technologies can help insurers automate routine tasks, power predictive modeling, and enhance decision-making through all workflows. 

Overall, insurtechs that leverage AI and ML help insurers be more efficient with their resources, no longer reliant on manual efforts to aggregate, enter, and analyze data, process claims forms, or field general inquiries and requests that AI-powered chatbots can handle effectively. For policyholders, AI-powered identity solutions enable a more seamless, personalized, and convenient experience that can strengthen their loyalty to their insurance provider.

Embedded Insurance

Embedded insurance is a quickly growing market that’s helping to make the insurance uptake process much more straightforward and efficient for consumers. 

Signing up for insurance can be a confusing and complex process that might deter potential customers. But, insurtech solutions partner with providers across different industries to embed insurance at the point-of-sale (POS) into existing purchase processes for products and services. 

Embedded insurance bundles insurance add-on options into purchase experiences, making secure insurance coverage more accessible and streamlined. In practice, this might look like the option to add travel insurance to your purchase when booking a flight or when a property management company lets you opt-in to paying for renter’s insurance with your monthly rent payments.

Telematics and IoT Devices

The integration of telematics and IoT devices has been a significant evolution in insurance, powering real-time data collection. This includes advancements such as connected vehicles, smart home sensors, wearable devices, and more. 

In turn, this technology enhances insurers’ abilities to create accurate policyholder risk profiles and tailor their premiums to their specific behaviors. It can also work to mitigate risks and prevent potential property loss. For instance, door or window sensors installed in a policyholder’s home can detect if they’ve been opened or closed, alerting the homeowners that there’s been a possible break-in attempt to help prevent the theft of their property and valuables.

Web 3.0

Web 3.0 technologies herald a new era in insurance, marked by decentralization, interoperability, and enhanced security. Decentralized platforms, powered by blockchain and smart contracts, automate insurance processes, from secure data collection & analysis, to policy issuance and claims settlement. Removing intermediaries streamlines critical processes like claims settlement and disbursement, policy issuance, and fraud detection without any human intervention. Tokenization adds another layer, enabling fractional ownership and increased liquidity of insurance assets.

Threat Identification & Mitigation

As technology becomes more embedded into modern insurance operations, insurers confront more risks such as malware, phishing, and insider breaches. There is a growing need for robust threat detection & mitigation solutions to ensure sensitive customer data remains secure and help insurers stay compliant with industry regulations. 

By nature, the data insurers collect, use, and store is highly sensitive, including policyholders’ financial data, health information, and in the case of telematics, their geolocation. A potential data breach would be devastating for insurers, so the deployment of advanced  identity-enabled fraud prevention solutions are vital to safeguard customer data, ensure compliance, and maintain trust in the digital insurance ecosystem.

Put simply, the traditional insurance model has been turned on its head in recent years, pushing traditional providers to modernize their operations or risk falling behind in the market. With so much competition in the industry, policyholders can quickly find an alternative if they aren’t satisfied with their current provider.

Insurers are aware that the tides are shifting and policyholders are gaining more power, though there is still some hesitation around embracing digital innovation to drive insurtech solutions. Part of this stems from an inability to modernize outdated legacy technology, which is common to many industries. However, a good portion of these headwinds come from the regulatory environment of the insurance industry and strict data security laws that insurers must adhere to.

In many ways, widespread digital transformation in insurance is inevitable. It’s up to each insurance company to decide if they’re going to embrace this evolution and proactively mitigate the associated risks with robust IAM solutions, or remain stagnant and lose market share to more innovative peers.

Forward-thinking insurers must be strategic in how they approach this next iteration of the market. As consumer preferences change, regulations evolve, and operational headwinds strengthen, digital transformation will help insurers become better equipped to improve efficiencies and deliver the seamless digital experience that modern policyholders expect.

Ping Identity helps companies enable high-touch experiences at all stages of the policyholder journey–all while maintaining security and compliance. The Ping Identity platform provides comprehensive solutions to help insurers drive profitability, accelerate digital agility, and deliver a premium customer experience built for the digital age.