How technology impacts the insurance sector

Rather than merely adding value to the insurance sector, technology and technical innovations are now determining its very growth and evolution. The last few years have seen mobile devices, GPS functionality and social media engagement impact hugely as to how insurance claims are processed by companies and policies assessed by insurance agents. Analysis of data and the value of legitimate customer interactions is more important than ever and have helped insurance companies to maximize profits while keeping the customers happy.

The impact of technology

While e-commerce giants like Texas Farmers Insurance Company, Allstate Texas Lloyd's, Liberty Insurance Corporation and ASI Lloyds to name a few are challenging traditional ways of buying insurance, new, fast and more reliable ways of insuring self, goods, properties and commodities are being set up to enhance end user experiences and settling insurance claims. The market trends are evolving from traditional broker based scenarios to a more subtle direct-to-market approach where middlemen are cut off and the brokerage benefits are passed directly to the consumer. Also, considering how insurance policies were underwritten previously, today companies are able to transform the data provided by potential customers into actionable insights and directly assess individual risks rather than rely upon customers to answer a set of standard questions to evaluate them.

Technology, considering the ongoing market trends and customer preferences as on today, is no longer a "nice to have" notion but a crucial differentiator clearly spelling out success and failure - Insurance companies have to keep pace with cutting edge technologies and constantly enhance end user experiences to challenge competitors and remain competitive.

Benefits of technology

While using technology as an enabler for generating growth, the future of a company depends heavily upon what type of technology it uses and how well it uses it. The better and more effective technology you use, greater will be the growth. 

Generating new business

Unlike FMCG businesses which a large variety of products to offer, insurance companies have fewer policy products to sell. So acquisition of new customer is always an important issue and companies are forced to increase their sales team to reach out to new buyers. To sustain growth and generate profit on a continual basis, online or digital marketing processes can aid insurance providers to reach out directly to the vast magnitude of online buyers. Traditional advertising methods such as hoardings, banner promotions, signage and TV commercial ads incurred substantial promotional expenses whereas the same objectives can be availed through online PPC advertising campaigns which are easily afforded and cost significantly less. Moreover, it's much easier to target new buyer audiences online rather than reaching out to them physically as was the case in the past. Technology helps to reduce customer acquisition cost.

Reduced operational overheads

For any company it's always fruitful to save a few dollars and reduce expenses whenever possible to save for a rainy day. Operational overheads are a major concern to organizations and demand a large chunk of working capital to support business processes and operational activities. More and more fortune 500 companies now have in-house departments which oversee operational overheads and find innovative ways to reduce expenditure while expediting the organization's business processes. Process automation can go a long way in reducing workforce and employee cost by substituting humans for technology enabled processes and devices. It's more reliable and cheaper to store, retrieve and process documents electronically using PC networks and limited human intervention rather than employing a huge team of clerical personnel to physically move files and folders to different places in cabinets and storages situated in different parts of the building. In addition, you don't need several branch offices in different parts of the country and maintain staff for all of them. Technology helps to reduce operational cost.

Making policy underwriting easier and quicker

The heart of any insurance company, policy underwriting policies and efforts put in by the evaluation agents directly decide how well the insurance business will grow and whether the company shall make a good profit through the premiums or not. Insurance agents need to communicate and ask a lot many questions before they can give a clearance. One of the biggest hurdles faced by agents in the past was meeting a client at a particular location, or at a particular time and explaining the nitty-gritty of the policy. This consumed a lot of time and agents had to travel a lot to "close" customers and meet target deadlines. Nowadays, policies are clearly explained on portals and interested visitors can communicate directly with the agents using online chats tools and video conferencing facilities to inquire about eligibility aspects, answer queries and facilitate the agent in deciding the underwriting process. That way agents can respond to many customers in a day and decide which customer should be given the policy and which shouldn't. Technology helps to make the underwriting process easier and quicker. 

Target ideal customers to enhance brand value 

MNCs spend billions of dollars to create and build powerful brands. As per market research the cost of branding activities in the U.S. rose to 5.5 percent in 2015 to reach more than $560 billion. It gives an idea how much important branding is how much big MNCs are ready to spend for it. Branding is always expensive as it takes years to build a brand and a lot of advertising capital. The social media plays an important part in branding and insurance companies now don't have to spend exorbitant sums to create and maintain their brands - they use a fraction of the budget they used in the past to achieve the same objectives by promoting and advertising their brands on Facebook, Twitter, Instagram, Pinterest and other social media venues. The biggest advantage is you can target prime customers very effectively using marketing insights facilities and analytics tools which are often provided by the media portals. Moreover you can submit videos and adverts to cover all types of audiences as and when required. Technology helps to target ideal customers and enhance brand value since you can do more over social media by spending less of advertising and branding budget.

Achieve higher ROI 

All businesses strive to achieve high ROIs to increase profits. Businesses generally borrow capital from banks and investors at high interest rates or raise the money through public limited issues and incorporations. Technology helps to drastically reduce working capital and offer a tremendous opportunity for insurance companies to churn out higher profit margins through online activities, electronic funds transfer and process automation which are all made possible using reliable technologies. 

There are many other significant advantages of using technology to boost sales by making it easier for consumers to avail insurance policies and expediting the underwriting process. Reputed insurance companies provide affordable insurance packages to consumers worldwide and even help them in their dire times.

Note: Reference of publicly available material has been taken for this write up.


About the author

HITESH KHRISTY is a Development, Project Management and Reinsurance Broking professional, having worked in multiple countries. He is an Author to a book, and has been writing for NGOs, Technology Companies, Insurance sector on social issues, political empowerment, United Nation and its concerns for more than a decade.

He has been involved in teaching, speaking at Social work, Social science schools & various universities in different countries on "Insurance for Social Change", "Welfare Insurance", "Micro Insurance", "War & Terrorism", "Modern Social issues". Few of his upcoming books are 1) Modern Social Problems, 2) Liability Insurance, 3) Terrorism.

Related articles


FRISS: Uncovering insurance fraudsters

If you compare the insurance fraud business to other types of business, it pays off to commit insurance fraud. The benefits are great, the chances of being caught are low, and the sanctions you get once caught are low as well. So, whether working in the claims, financial, underwriting or SIU department; you will all deal with fraud at some point. And it does not stop at an organization or a border. Fraudsters do market research. They use different modus operandi, use different insurers, fake identities; just to make sure that they don't get caught.


Technology and data: Focus on the good we can do

Technology. The press is covering it, everyone is talking about it and we, as an industry, are spending time and money investing in it. For all this reasons and more, we will shortly talk about this topic at our Swiss Re L&H Conference in Warsaw in May: "Think tomorrow! Innovative solutions for our industry."


Insurance is the industry most affected by disruptive change, according to PwC

Insurance is the industry most affected by disruptive change - based on the percentage of CEOs who are 'extremely concerned' about the threats to growth from over-regulation, the speed of technological change, changing customer behaviour, and competition from new market entrants, shows the 20th edition of the PwC Global CEO Survey.


Reducing the loss ratio by effectively detecting insurance fraud

Insurance fraud is a serious issue for the entire insurance sector. Payment of fraudulent claims has a negative effect on the loss ratio and on insurance premiums, which results into a competitive disadvantage. Moreover, investigating 'false positives' takes a huge amount of time and unnecessary costs. Fraudsters are getting smarter in their attempts to evade the insurer's radar. As a consequence, money flows to the wrong people and thus combined ratios are under pressure. Insurance companies must detect insurance fraud before claims are paid. The best way to reduce the loss ratio is to increase the chances of fraud detection at claims and limit false positives to a minimum. 


Innovation - the right response to the technological challenge

The driverless revolution in the auto industry is already buzzing along city streets around the world, in a variety of tests and trials—and not just for cars, but for 18-wheel delivery trucks loaded with beer. Yet the excitement surrounding the emergence of autonomous vehicles tends to overshadow another tech revolution underway: the addition of dynamic cognition layers that will enable cars to care for human comfort, information and entertainment preferences in new and unimagined ways, say the Watson IoT team.



Fraudsters are getting smarter in their attempts to evade the insurer's radar. As a consequence, money flows to the wrong people and thus combined ratios are under pressure. Insurance companies must detect insurance fraud before claims are paid. The best way to reduce the loss ratio is to increase the chances of fraud detection at claims and limit false positives to a minimum.


Professional Requirements Engineering as a Key Factor for Successful Software Projects

In order to help your IT projects to succeed in time, budget, and scope, Requirements Engineering is a key success factor. Professional RE employed in a project or compa-ny-wide relies on trained Requirements Engineers. With increasing degree of maturity the use of IT tools built for Requirements Engineering become a critical factor in order to fully profit from automation aspects to save further costs and time.


Requirements Engineering and Legacy Systems

In order to remain competitive in the market, for example by a fast introduction of new insurance products, the legacy systems have to be modernized or replaced sooner or later. For this task, three alternatives were introduced with their advantages and disadvantages. All alternatives rely on a successful IT-Project.
In order to help them to succeed in time, budget, and scope, the professional application of different Requirements Engineering techniques are a key success factor.




61st "Rendez-Vous de Septembre" ends today in Monte Carlo: review

The 61st edition of the "Rendez-Vous de Septembre", the annual traditional meeting of reinsurers ends today in Monte Carlo. The Nat Cat insurance protection gap, as well as the global insurance market readiness to deal with the increasing complexity of the cyber risks were among the most debated topics.



MONTE CARLO: Live news from the "Rendez-Vous de Septembre"

The 61st edition of the "Rendez-Vous de Septembre", the annual traditional meeting of reinsurers has started yesterday in Monte Carlo. XPRIMM publications on the CEE, SEE and CIS insurance markets are available at the XPRIMM stand in Fairmont Hotel as well as at the other event's venues.


See all