Digital transformation has been an overarching theme in P&C insurance for several years. Carriers recognize the future of distribution, underwriting, policy servicing and claims all are dependent upon digital operations. In fact, every part of the P&C insurance business is affected by the march of technology and the way it is changing customers, risks and operations. The pandemic accelerated tech and digital trends, causing carriers to rethink and reshape their plans. SMA research shows that 100% of carriers in all P&C segments have significant digital transformation plans underway as they increase competitiveness for today and prepare for the future of insurance.
Driving this transformation is the way that digital, connected technologies and artificial intelligence are changing the world around us. We are still far from the science fiction scenarios of robot overlords and androids that are indistinguishable from human beings. But the world we inhabit today is dramatically different from just a decade ago. The average person has many digital interactions every day, from ordering dinner or groceries online to shopping for goods and communicating with family, friends and business colleagues. Real-time video, speech-to-text translation for email or texting, online chat and a vast array of social media platforms are readily available and pervasive in their use.
Every day, individuals and businesses benefit from automated driving and safety features and the ability to remotely monitor and control their homes and businesses via a mobile app. The next 10 years promise to usher in just as much or even more dramatic change than the last decade as we progress toward autonomous vehicles, augmented/virtual reality for daily interactions and the instrumentation of the world — connecting everything insured by the industry to the internet.
The implications for P&C insurance are enormous. While all this tech-driven change may seem overwhelming, it is useful to think about what it means for insurance in three categories: customer expectations, the evolving risk landscape and operational efficiencies.
Carriers have been on a path to gaining a deeper understanding of customers (including policyholders and agents). The pandemic has enhanced expectations across the board. By necessity, the world shifted to a virtual, digital mode during the pandemic. Now, instead of asking if you offer remote, digital, omnichannel capabilities, the question is, why don’t you offer these capabilities? Customer journeys have been reshaped and expectations altered for everyone interacting with a carrier, including business partners and employees.
AI and the digitally connected world have already surfaced new risks, chief among them being cyber risk. As digital data from billions of connected sources flows through the business ecosystem, the cyber exposure increases exponentially. It is a great opportunity for P&C industry leadership. However, there are many new or evolving risks on the horizon. The risk picture is shifting for increasingly autonomous vehicles and homes, businesses, farms, vessels and their cargo, and many more things, as well as people and workers. Will these reduce claims dramatically? Or will they introduce new, unanticipated risks?
Operational efficiencies are already receiving a boost from automation and technologies such as robotic process automation (RPA). Now solutions for data pre-fill, automated decision-making and advanced communication capabilities yield big benefits for insurers. In addition, the potential is high for carriers to gain new insights to improve risk selection, policy servicing and claims.
Some may conclude these developments crowd out humans as automation and AI takes over. Nothing could be further from the truth in the P&C industry. The value of insurance professionals will be elevated due to two primary factors: expertise and empathy. Certainly, many simple activities will be automated and taken out of the hands of insurance professionals — to their delight.
However, insurance is a complex business that is foundational to society and designed to meet customers at their greatest times of need. There may be fewer agents, underwriters and adjusters in the future due to demographics, but those roles will be more focused on adding value through their deep expertise and the human touch when advising customers on how to address their risks and guiding them through a claim. The roles will evolve, to be sure, as carriers seek the best tech/human blend, but there will still be a great need for expertise and person-to-person interaction that will not be automated away.
The P&C industry’s future is bright. The world only gets more complex, and the need to aid individuals, businesses and governments in navigating the risk landscape, being proactive in risk management and providing indemnification when bad things occur is likely to increase. This provides a great opportunity for leadership — especially for those willing to take bold action today.
Mark Breading is partner, carrier transformation, at Strategy Meets Action, a ReSource Pro company. He specializes in advanced and transformational technologies.
The opinions expressed here are the author’s own.
