FRISS Survey: The insurance industry is catching up in digital transformation
The survey was initiated to get a better understanding of the current market state, uncovering emerging global trends in P&C insurance regarding digital transformation.
Digital transformation provides the insurance industry with the opportunity to use technology to improve efficiency, increase customer satisfaction, and realize new strategic opportunities. These opportunities could create new services or business models and improved efficiency. Digitalization also opens doors to improve customer experience. However, digitalization can also result in additional risks and new emerging fraud schemes, as indicated by the results of the analysis.
Key survey findings show:
- Insurtech is the engine of innovation. 88% of the insurers are convinced that insurtech offers great opportunities. While it is certainly possible to develop specific technologies yourself, many companies prefer to use the expertise of specialized insurtech companies to support their digital transformation, for example, in the development of mobile applications, machine learning, artificial intelligence, bots or blockchain, etc. The number of areas to be developed is extensive. The speed and complexity is mind boggling. Half of the insurers are now working on insurtech applications or conducting experiments with these applications. 19% are already investing in it. For insurtech, the question is whether to 'make' or 'buy'. You can make it yourself, but can you also maintain it and innovate further? Cooperation in this area offers opportunities. 11% of insurers even consider buying insurtech companies to ensure continuity of maintenance and innovation.
- Use of blockchain technology is currently in an early development stage. Insurers have also heard of blockchain, but it is scarcely developed. 44% have no idea as yet whether or how blockchain could be useful. Those insurers who have considered it, think it might be useful to simplify transactions, facilitate the claim process or reduce fraud. 21% are thinking of trying it. Only 2% have actually started.
- Online distribution seems more difficult than envisaged. It seems logical and even necessary for insurers to switch to online distribution channels. Many establish online channels alongside traditional agents or advisers; some only use online channels. Nevertheless, this development does not seem to be occurring as quickly as anticipated. 69% of insurers have some form of online distribution. A similar survey from 2016 showed that at that time it was 65%. This is an increase of only 4 percent point. However, 45% of insurers who do not yet have an online channel currently say they want to introduce this in the coming year.
- Fighting fraud is easier with technology. As processes speed up in order to provide better and faster service to customers, it is logical to expect that the number of fraudsters or fraudulent claims that are not discovered by claims handling will also increase. It is possible to make the automated claims handling process fast and friendly for honest customers. At the same time, it is possible to simplify processes, reduce risks, and detect and prevent more fraud. 32% of insurers now use technology for fraud prevention. 48% of insurers use it to determine the level of premiums and 45% use it to support underwriting.
Digital transformation as a motor
The digital transformation of the insurance industry is in full swing. The sector is very aware that this process is not something that is merely nice to have, but that it is increasingly the engine of the industry. However, not all developments seem to penetrate the entire sector as a matter of course and the pace is slower than expected. Companies leading the way therefore take a bigger lead and slower companies will have to make a big effort to avoid insurmountable technological deficiencies.
The full report can be downloaded via this link.
FRISS is a worldwide provider of AI powered fraud and risk solutions for the P&C insurance industry.